What Happens When an IRD Dispute Is Referred to the Disputes Review Unit?

16 January, 2020 | Nathan Tetzlaff

If you are involved in a dispute with Inland Revenue your case may be referred to the Disputes Review Unit. This article provides a brief overview of how a dispute with Inland Revenue will be resolved and where the Disputes Review Unit fits into the process.

What kind of IRD disputes are referred to the Disputes Review Unit?

A dispute will generally arise when the Commissioner of Inland Revenue issues a proposed adjustment to your prior tax position (for example adjusting the amount of tax payable or deductions available for a particular period). It is also possible that you as the taxpayer could issue a notice of adjustment but this article will focus on a dispute arising from a Notice of Proposed Adjustment (NOPA) issued by the Inland Revenue.

The Process

Assuming you dispute the proposed adjustment you must reject the proposed adjustment by responding with a Notice of Response (NOR). Following your rejection you will be given the opportunity to attend a conference facilitated by a senior Inland Revenue officer who is not involved in your dispute.

The conference is an opportunity to resolve any differences in the understanding of facts and legal arguments involved in your dispute. The facilitator is not a decision-maker in the process they will simply assist each side to reach a resolution. Smith and Partners are able to advise you in producing your Notice of Response (NOR) and will support you in attending the conference if you require us to.

If the conference is unable to resolve the issues and you each maintain your position the Commissioner is required to issue a Disclosure Notice and you are both required to issue a Statement of Position (SOP). At this point there is an opportunity, under certain circumstances, to opt out of the disputes process and proceed directly to a Taxation Review Authority review. Again Smith and Partners can advise you on producing your Statement of Position (SOP) or in opting out.

At this point, if the dispute is still unresolved, the matter will be referred to the Disputes Review Unit which is part of the Office of the Chief Tax Counsel in Wellington. Each dispute is reviewed by a panel of three tax experts with professional legal or accounting qualifications and experience in researching and analysing tax issues.

The panel will review the material from both parties including the Notice of Proposed Adjustment (NOPA), Notice of Response (NOR) and Statement of Position (SOP) documents, and provide an impartial and independent decision on the issues. The Disputes Review Unit will issue a report of their findings which can be either fully or partly in favour of one side.

Disputes Review Unit Decisions

Recent decisions have averaged 80% in favour of the Inland Revenue. Where the decision is in your favour the Commissioner will not challenge it and the dispute will come to an end.

Where the decision is in favour of the Commissioner, Inland Revenue may issue an additional notice of assessment. If you disagree with the finding of the Disputes Review Unit, or any revised assessment, you are still entitled to respond by filing proceedings with the Taxation Review Authority or the High Court.

Each of the stages of the disputes process have prescribed timeframes or guidelines and Smith and Partners can assist at each stage to ensure you meet your timeframes and advise on what your next obligations or options might be.

Are you in dispute with IRD over tax Debt? Get your dispute sorted quickly and efficiently, contact litigation executive, Mikayla Sagar by email on mikayla.sagar@smithpartners.co.nz or by phoning 09 837 6890